Keith Rankin: Whither National?

Whither National?

Keith Rankin, 8
August 2002

Will the National Party wither?
Yes, if it doesn't stand for anything. So what could it
stand for? I see it having a future if it adopts a
'libertarian centre' position in contrast to Labour's
'authoritarian centre' place on the political grid, and in
contrast to Act's 'libertarian right' position.

So what do
these words mean? How many of us could give a clear-cut
definition of what we mean by 'left-wing' and
'right-wing'?

Helen Clark stated in the election campaign
that Labour is a party of the left because it is
"redistributive". To an Act supporter, such comments
bristle. Clark is not merely justifying theft, she's openly
recommending it.

Since Adam Smith published the Wealth
of Nations in 1776, taxation has come to be understood
as a kind of theft that is justifiable up to a point. Hence
he argued that taxes should be minimised, given that
governments were necessary and therefore had to have some
revenue.

The sub-text of Smith's position is that
'property' is, by its very nature, private. In this sense,
Smith was a man of the right. The right emphasises the
primacy of the private side of the economy (and of society
in general), and seeks to minimise the kleptocratic
propensity of the 'state'. (It was in Smith's time that the
concept of 'sovereign' gave way to the concept of 'the
state' in the language of political economy.)

Tax becomes
the key issue then that separates left from right.
Right-wingers believe in minimal taxation, socialists (the
authoritarian left) believe in a high level of taxation to
fund social wage goods such as 'free' health and 'free'
education. A centre party subscribes to an intermediate
level of taxation.

I propose to redefine left and right,
slightly. To be 'right' is to define legitimate public
revenue as a relatively small share of gross national income
(GNI, formerly GNP). To be 'left', then, is to define
legitimate public revenue as a relatively large share of
GNI. The key change is that public revenue is no longer
theft, per se. Public income is at least as
legitimate as private income. It represents a return on
public assets.

Indeed, once we define the public share of
the economy as being legitimate, if there is theft, it may
well work in the opposite direction to that which is
normally assumed. If most of the nation's income is
appropriated as private income, then we could easily argue
that many private individuals have their hands in the public
till. After all, in the aftermath of Enron etc., we know all
about the way that private executives can steal from their
shareholders.

So, to be left is to believe that the public
share of the national economy is large. To be centrist is to
believe that the public share of the national economy is
neither large nor small. That is National's natural
position. Certainly, National now knows there are few votes
in advocating the transfer of public wealth into private
pockets through tax cuts. Only Act can secure those votes,
and even Act has had to turn to other issues to grow its
vote.

So what is 'libertarian'? Well, there are two ways
that public wealth can become private wealth. Only one is
legitimate. Public wealth is the equal property of every
permanent resident. So, distributing public income as cash
dividends is legitimate, just as distributing company income
as dividends to shareholders is legitimate. What is not
legitimate is transferring public income (or company income)
to private individuals other than the owners of that
income.

An extreme libertarian position is to advocate the
complete distribution of a nation's public income
equally to all permanent residents of a nation. An
extreme authoritarian position is to advocate that the
nation's public income should be 100% withheld by the
government, and spent by the government on behalf of the
owners of that income.

Defining one's position on the
authoritarian-libertarian scale is partly a matter of
science and partly a matter of belief. Similarly, defining a
position on the left-right scale is as much a matter of good
accounting practice as it is a matter of philosophy.

No
economist would argue that allowing everyone to spend 100%
of their publicly-sourced income would be economically
efficient. This is because, due to market failure, most
public goods must be funded and purchased collectively. Few
economists therefore would be extreme libertarians. Many
libertarians however are little concerned about economic
efficiency. Some people have a congenital cynicism towards
any form of government spending on our behalf. So, for
example, people like Lindsay Perigo are virtually 100%
libertarian.

The National Party could be neither as right
nor as libertarian as Perigo's Libertarianz. National
activists are realists who recognise that there are a wide
number of public and merit goods that require substantial
collective funding; we only have to nominate the usual
suspects: health and education.

What matters is that
National can stake out a position that is distinctly more
libertarian than Labour, while holding the same centrist
view about what proportion of national income represents
public revenue. So rather than talking about tax cuts, they
should be talking about things like tax credits, social
dividends, growth dividends. These represent an equitable
distribution of public revenue, whereas tax cuts
represent an inequitable redistribution of public
revenue to, mainly, a small number of already rich private
individuals.

We already receive various tax credits and
social dividends. All that we need to see them is a radical
modernisation of our public accounting systems.

(A left
libertarian position favours a substantial distribution of a
public fund that is understood to be a large share of gross
national income. A universal basic income would normally be
understood as a left-libertarian policy initiative.)

A
vision that promises all New Zealanders a cash return on our
public assets has the potential to make National relevant
once again.

Keith Rankin has taught economics at Unitec in Mt Albert since 1999. An economic historian by training, his research has included an analysis of labour supply in the Great Depression of the 1930s, and has included estimates of New Zealand's GNP going back to the 1850s.

Keith believes that many of the economic issues that beguile us cannot be understood by relying on the orthodox interpretations of our social science disciplines. Keith favours a critical approach that emphasises new perspectives rather than simply opposing those practices and policies that we don't like.

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